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Rep. Hart IRS foreclosure case back on track

Mon., Sept. 24, 2012, 11:30 a.m.

BOISE - Federal authorities are gearing back up for their foreclosure lawsuit against tax-protesting Idaho Rep. Phil Hart, now that Hart’s voluntarily dismissed his bankruptcy filing - which had placed an automatic stay on the foreclosure case.

U.S. District Judge Edward Lodge has lifted the stay in the case that goes after Hart’s log home in Athol, but at Hart’s request, agreed to a delay until mid-November for the first discovery deadlines in the case, due to the unexpected illness of Hart’s Kentucky attorney. U.S. Justice Department lawyers had asked for a deadline a month earlier.

In legal documents filed in federal court in Boise, Hart’s lawyers wrote, “Hart has no objection to the lifting of the stay,” as long as the deadlines are pushed back. The lawyer’s malady is described variously in the filing as “a sever staph infection” and as a “staff infection.”

The legal filing was accompanied by a letter from Dr. Kenneth Green, certifying that his patient, attorney Charles McFarland, is under his care for an abdominal infection. “It is not in his best interest at this time for him to travel,” the doctor wrote. “He is an infectious risk both for himself and for others.”

Hart filed his bankruptcy case in May, just 48 hours before he was scheduled to be deposed in the home-foreclosure case, which seeks to take his house to settle more than $500,000 in back federal income taxes, penalties and interest.

That was after Lodge in April denied two motions from Hart to further extend discovery deadlines in the foreclosure case, saying the attempt “effectively seeks to unduly delay this matter.”

Last month, Hart acknowledged in a stipulation that he’d improperly filed his bankruptcy under Chapter 13 of federal bankruptcy law, because his debts were too high to qualify under that chapter. He agreed to a voluntary dismissal, which the bankruptcy court granted; it still permits refiling the case, possibly under a different chapter.

However, federal bankruptcy law creates a disincentive for refiling voluntarily dismissed cases: Any automatic stay under a refiling would expire after 30 days.

Neither Hart nor his bankruptcy attorney, Michael McFarland of Coeur d’Alene, responded to queries about whether Hart plans to re-file his bankruptcy case.

Hart maintains that he doesn’t own the Athol home, though he built it and lives there; it’s owned by a trust in his daughter’s name. Federal authorities, in court filings, called the transfer of the home to the trust a “fraudulent” transaction with a “sham entity.”

It’s the same home for which Hart illegally cut logs from state school endowment land in 1996, maintaining that as a citizen, he had a right to take the logs for free; after repeated, unsuccessful appeals, he never fully satisfied a court judgment over the timber theft. An expired statute of limitations prevented the state from pressing collection efforts.

The four-term lawmaker, who was defeated for re-election in the May GOP primary, long has maintained that both state and federal income taxes are unconstitutional. He stopped filing both federal and state returns in 1996 while he unsuccessfully pressed a federal lawsuit challenging the federal income tax; after the case was rejected, he began filing returns again, but authorities maintain he’s never fully paid up.

He’s also been fighting an order to pay more than $53,000 in back state income taxes, interest and penalties; he’s lost numerous appeals in that case, including one to the Idaho Supreme Court.

Hart faced multiple ethics complaints in the House last year over the timber case and his tax fights; he’s repeatedly claimed legislative privilege to win delays in his state and federal tax cases, and offered legislative privilege as a defense in the IRS foreclosure case, but the federal court rejected that.

The original schedule for the home-foreclosure case called for discovery deadlines last June; pre-trial motions by July 2; and a trial starting Nov. 6. The judge’s latest order sets the discovery deadline for Nov. 16 and requires pre-trial motions by Dec. 17, but doesn’t yet set a new trial date.

U.S. Department of Justice attorney Adam Strait noted in court documents that the original schedule was designed in part “to avoid interference with Defendant Hart’s ability to prepare for the 2013 legislative session,” and wrote, “That concern has been alleviated” since Hart lost the primary election.

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